Self-managing rental properties can be a disaster if you are not prepared to handle the responsibilities that come with it. To avoid potential risks connected with self-managing https://rentredi.com/, it may be best to hire a property management company or a professional property manager who can handle the day-to-day operations of your rental business. This will allow you to focus on growing your business and passive income while ensuring that your properties are well-maintained and your tenants are happy.
Residential rental properties are the most popular choice for long-term real estate investors. They provide a steady stream of rental income, and the value of the property may appreciate over time, providing potential for capital gains.
Besides passive income and many other benefits this type of investments can also carry risks, such as fluctuations in property values, changes in the real estate market, and the cost and difficulty of managing properties. Let’s talk about property management. Self-managing in particular.
If you are one of those entrepreneurs who is obsessed with being in charge, a total control and wearing many hats in your business, this post is for you. Self-managing of rental assets is incredibly time-consuming process that sometimes becoming a full-time job. One of the biggest challenges is finding good tenants. Our main goal as an investor is not just to keep our rental units physically occupied but economically occupied! (read it again and think about it)
Self-Managing: Trouble number One — Bad Tenants
Bad tenants can cause significant problems for landlords, including damage to the property, non-payment of rent, and legal issues. Here are some of the most horrible known cases with bad tenants:
- Property damage: In some cases, bad tenants may cause significant damage to the property, such as holes in walls, broken windows, or destroyed carpets. This can result in costly repairs and lost rent while the property is being repaired. Students housing..
- Non-payment of rent: Some tenants may stop paying rent, either because they are unable to afford it or because they simply choose not to pay. This can result in financial losses for the landlord and the cost of going through the eviction process.
- Legal issues: Bad tenants can also cause legal problems, such as violating lease terms, engaging in illegal activities on the property, or suing the landlord.
Doug is a veteran who is often away from home for work. This absence was pretty convenient and attractive to his daughter who asked if she could live in his home temporarily. He couldn’t say “No” to his own child who also has a child and needs his help.
From that moment on, Douglas’s house was no longer empty. Parties and guests who stayed overnight, from time to time, slowly turning into tenants. With only one difference, they did not pay rent or contribute to expenses at all.
But Douglas will find out about this later, upon his return to discover a whole stack of unopened envelopes of unpaid bills and the remnants of the mortgage. Moreover, the house was in a deplorable condition: wrecked walls, bathtubs, and toilets were easier and cheaper to replace than try to clean. The carpets had absorbed gallons of spilled alcohol, vomit, and a foul odor of a public restroom. Everything was smashed and abandoned, including Douglas.
The house has been in the process of pre-foreclosure. Douglas was planning another trip ahead and soon he would be facing bankruptcy. The home’s condition made it impossible to sell in the shortest possible time. The stress was piling up.
We just moved to the area where Doug lived. He had only one desire and that was to get rid of the remnants of the mortgage and start a new life. Our poor neighbor made several vain attempts to sell his mutilated house. But when buyer after buyer left, Douglas was gloomy. Finally, we came to an agreement and bought his house from the bank, freeing this man from bankruptcy.
By Christmas, he had moved to Texas closer to his son’s family. In the prior months Doug continued to live in his house, packing his belongings and arranging for his move to Texas. He never stopped expressing his gratitude for our ability to help him when he needed it most. Thus, Doug’s home formed the basis of our company, which began with the history of TLC Estate.
To prevent renting your house or apartment to bad tenants, consider the following:
- Thorough screening process: Thoroughly screen all potential tenants, including running background checks, checking credit reports, and verifying employment and rental history.
- Require references: Require references from previous landlords and personal contacts to get an idea of the tenant’s rental history and behavior.
- Consider rental insurance: Consider purchasing rental insurance, which can provide coverage for damages caused by tenants, as well as loss of rent if the tenant stops paying.
- Clearly define lease terms: Clearly define the lease terms and make sure that all tenants understand their responsibilities, including payment of rent and maintenance of the property.
- Stay informed: Stay informed about changes in housing laws and regulations that could affect your rights as a landlord.
Sources to vet your tenants: https://www.apartments.com/rental-manager, https://prioritycommerce.com/smb-payments/landlordstation/
Challenge Number Two: Maintenance
Maintenance of rental property can indeed be challenging, particularly if you’re handling it on your own. Tasks such as fixing toilets, leaks, AC, and lawn care require specialized skills and can be time-consuming. It’s advisable to consider hiring a professional property management company to handle these tasks efficiently and effectively. Every landlord should have a handy person, plumber, electrician on their contact list. It is essential to start building a team you can reach out to when you need them as soon as you take ownership, especially for larger properties with many tenants.
The last thing you want to do in the middle of the night is take your plunger and go to check clogged toilets. Some issues cannot be fixed as quick and easy as clogged toilets. Just imagine endless messages and calls about pest infestations (very common problem), noisy or disruptive neighbors, complaints about lack of safety and security, about rest increase and financial issues, complaints about discrimination or other unfair treatment 🤦 🤦 This list of landlord-tenants problems goes on and on.
As a landlord, it’s important to address these issues promptly and professionally to maintain a positive relationship with your tenants and avoid any potential legal issues.
Issue Number Three: Rent Collection
The most rewarding part of rental business can be the most problematic at the same time. Collecting rent is not an easy task, especially if you are trying to do it on your own.
- Late or missed rent payments: Tenants may forget to pay rent on time or intentionally delay payment, which can cause financial problems for the landlord.
- Difficulty communicating with tenants: Without a property manager to act as an intermediary, landlords may find it difficult to communicate effectively with tenants regarding rent payment and other issues.
- Inability to enforce lease terms: Landlords may find it challenging to enforce lease terms, such as late payment fees or eviction, without the help of a property manager.
- Lack of resources and expertise: Landlords who self-manage their properties may lack the resources and expertise to effectively manage rent collection and other property management tasks.
- Legal issues: Landlords may inadvertently violate tenant rights or fair housing laws if they are not familiar with the relevant regulations and laws.
While property management fees may seem high, it’s important to consider the value that a property management company can provide. Property managers can handle the day-to-day tasks of managing your properties, such as rent collection, maintenance and repairs, and tenant screening, which can save you time and reduce stress. Additionally, property managers may be able to help you avoid costly mistakes, such as violating tenant rights or fair housing laws.
The decision to manage your rental portfolio on your own or hire a management company depends on several factors, including your experience, available time, and financial goals.
If you have experience in property management, are willing to put in the time and effort required to manage your properties, and want to keep your operating expenses low, self-managing your rental portfolio may be a good option for you. However, it’s important to note that self-managing can be time-consuming and stressful, and you may need to invest in property management software or other tools to help streamline the process.
On the other hand, if you have limited experience or time, or you want to have a hands-off approach to managing your properties, hiring a property management company can provide you with peace of mind.